1. The Transport and General Workers' Union
as the largest trade union in the bus industry representing over
82,500 people working in the industry, welcomes the opportunity
to contribute to the inquiry into the bus industry by the Transport
Sub-Committee.

Subsidies in the United Kingdom bus industry,
and the result of "bus challenge" initiative in rural
and urban communities

2. Public transport support, also known
as "revenue support", covers all forms of local authority
current expenditure on public transport, other than concessionary
fare reimbursement. At 2000-01 prices public transport support
for local bus services by area outside of London has decreased
£378 million in 1987-88 to £282 million in 1999-2000.
This represents a decrease of 39 per cent during this period.
These figures include the new Rural Bus Subsidy Grant and Rural
Bus Challenge from 1998-89. Subsidies reach their lowest level
in 1997-98, but since then they have increased 20 per cent by
1999-2000.

3. During the same period the local bus
services fare index for outside London increased by 18.2 per cent
from 91.0 to 107.6. Between 1987-88 and 1999-2000 there has been
a 27.2 per cent decline in bus patronage outside of London. According
to Bus Industry Monitor 2001: 28 there is a 0.3 per cent change
in bus patronage for every 1.0 per cent change in real term fares.
The increase in the fare index explains 5.46 per cent of the decline
in bus patronage since 1987-88. Due to the small numbers involved
it is not possible to do a correlation analysis but there would
appear to be a clear relationship between the decline in the level
of subsidies and the reduction in patronage. It should be noted
that only changes in economic activity has a greater influence
on demand for public transport, which is 0.36 per cent.

4. The current Government introduced the
Rural Bus Subsidy Grant (RBSG) in 1998 due to concerns about the
level and quality of public services in rural areas. Originally,
it could only be used to subsidise new or improved services, to/from
settlements less than 10,000. We understand that, so far, the
RBSG has provided 1,800 new or enhanced services, with additional
passenger numbers rising from 10 million in 1998-99 to 16 million
in 1999-2000.

5. The Government relaxation of the eligibility
criteria of the RBSG including new services in and around market
towns and to continue support from existing bus serviceswas
welcomed by us. However, the second change may open the scheme
to possible exploitation by bus operators.

6. Local authorities tend to support unremunerative
services to support policy objectives such as social inclusion.
The TAS review for the DTLR on tendering practices of local authorities
confirmed that over 90 per cent use semi commercial criteriasuch
as cost to fares ratio or numbers of passengersrather than
any "needs" based criteria. Most authorities see secured
services as a means of supporting the weakest links of an overall
network.

7. We reject the argument that quality contracts
would be more bureaucratic than the current system. Passenger
Transport Authorities are currently fully occupied in a complex
but fragmented competitive tendering system, and struggling to
develop effective quality partnership agreements. Most of this
considerable effort is failing to deliver a co-ordinated development
of public transport. In contrast quality contracts would enable
PTAs to have a comprehensive and co-ordinated control which if
properly implemented would provide a better regulated and integrated
system, that would maximise the benefits to passengers and the
community as a whole. "There is enough evidence though to
indicate that fragmentation under tendering damages the market."
(TAS 2001:31).

8. Whilst the T&G supports local authority
input into local public transport, we are concerned about the
value for money likely to be obtained from Quality Partnerships
and the Audit Commission shares this view.

9. The Audit Commission have found that
local authorities invest far more in Quality Partnerships than
bus operators give back in return.

10. Amongst the Audit Commission's specific
conclusions were:

Councils and PTEs generally contribute between
£150,000 and £200,000 against a typical investment from
bus companies of only £25,000 to £40,000. In many cases,
the Audit Commission found that operators did no more than agree
to purchase new buses, which they might have purchased in any
event.

We wholeheartedly support the introduction of
quality contracts and the Government should encourage a much wider
application of this concept, which has been particularly successful
and proven in practice in other European countries such as France.
Quality contracts should not be restricted to a few areas where
quality partnerships do not work. We welcome the slightly stronger
powers introduced in Scotland to ease the move to a Quality Contract
regime and would like to see similar powers introduced into England
and Wales. These contracts should include an element of cross
subsidy from profitable parts of the route, to unprofitable parts
of the route. This would reduce the overall cost of the quality
contract to the relevant authority. This type of contracting is
successfully used in Sweden.

11. We believe that quality contracts would
bring the following advantages:

 stability of the network;

 local authority control over fares;

 the ability to specify the quality
and quantity of services and connections with other buses or other
modes;

 the benefits of cross subsidy.

12. An important element in ensuring that
these quality contracts are successful is to ensure that they
are based on modern minimum employment standards that are family
friendly, and do not require employees to work excessive hours.
We believe that unless the earnings issuereal wages have
declined since the industry was deregulatedis addressed,
it will not be possible to have the stable and professional workforce
needed for the provision of quality bus services.

13. Since deregulation and privatisation,
privately owned operators make decisions based purely on commercial
considerations [lowest cost] and not on the needs of their employees
and the wider requirements of the community. For example, service
frequencies at off peak times are often much reduced or non-existent,
as commercial considerations dictate that they are not profit
making, increasing social exclusion. Any incentive to innovate
on the part of bus operators is based purely on whether it will
create a profit or not. The framework under which the rail industry
was privatised recognised that private operators should not have
complete freedom to decide when and where they will operate services.
The same arguments apply equally to bus operators. Modern employment
practices and social responsibility are just as important as the
profit motive in today's bus industry.

The importance of bus priority measures and their
enforcement

14. The UK's love affair with the car has
resulted in the almost unimpeded conditions for car traffic in
our towns and cities. It is only now that we are seeing attempts
to reclaim passenger rights-of-ways. Bus priority measures are
an attempt to speed up one mode of public transport, but they
deal with one aspect of the slow speed of buses, traffic congestion.
Journey times and frequencies are an important factor in determining
what mode of transport is chosen. The greater the perceived frequency
of service the greater the likelihood of using that service.

15. The almost universal use of one-person-operated
buses has had a considerable contribution to congestion due to
slowed down pickup times. It is interesting to note that some
of the architects of the 1984 Buses White Paper were opposed to
the introduction of these busesespecially in urban areasfor
this very reason. They have been introduced for profit reasons
and not service considerations.

16. In terms of output achievement of passengers,
each £ of local authority spending on traffic priority and
infrastructure upgrading appears to achieve three times as much
as each £ spent on service subsidy, but this is based on
moving people onto buses. Rising passengers are part of a virtuous
circle, of increasing schedules in order to extend the network,
and therefore make buses more attractive. But this has to be a
long-term and consistent policy if it is going to work.

17. If bus priority schemes are to be effective
then the enforcement of the schemes is crucial. This raises questions
how and who is going to enforce them. If enforcement is perceived
to be weak then they are unlikely to be successful. Ultimately
this raises the question of funding for whatever system(s) are
used to enforce the scheme. It is unlikely that the police would
want to have much involvement in the enforcement of such schemes.
Therefore it is likely to be either a local authority or PTE responsibility.
Unless buses are physically separated from cars then there is
a strong likelihood that cars or commercial vehicles will use
or park in these lanes. It would be impossible to personally police
such corridors; therefore we believe that the only workable solution
to enforcement would be closed circuit television. We are aware
that these systems are costly but the price could be included
into the costing for the scheme, with the local authority or PTE
allowed to keep the revenue from the fine income. The T&G
would like to see better enforcement of bus lanes including higher
fines for offenders. All too often, bus lanes have become political
footballs between the private motorist and traders on one side
and the provision of more attractive public transport by local
authorities and PTA on the other.

18. Consideration should also be given to
extending the use of contraflow bus lanes along with bus only
streets and other traffic measures.

19. The approach to the enforcement of basic
traffic regulations is too lax, for example, the practice whereby
defective speedometers are allowed on buses in operation for periods
extending into weeks or even months in some parts of the country.
Dispensation for bus operators who have faulty speedometers who
have ordered parts should not be given by Traffic Commissioners.

20. The society we live in is one based
on convenience and of high car availability. Over 90 per cent
of all UK journeys are made on a "car available" basis,
and the bus will never again supersede cars as the primary mode
of transport. However, unless the image of the bus is to change
from that of transport of last resort then the issues surrounding
bus priority measures and their enforcement will have to be addressed.

Regulation of the bus industry

21. Regulation of the bus industry outside
of London has been partly responsible for the 18 per cent overall
decline in local bus service journeys since 1987-88. Since 1987
there has been no quantity regulation, except for notice of starting
or ending a service. In London a tendering process gives an exclusive
right, is granted for a fixed period, and is awarded following
competition between operators.

22. The main reason for the poor attractiveness
of deregulated services seems to be that without exclusive rights
in public ownership, service patterns are unstable and levels
of integration are low. Studies of the UK bus market immediately
before and after deregulation show that the change of regime was
followed by a sharp decline in ridership, a 33 per cent decline
in the English metropolitan areas from 1987-88 to 2000-01. These
studies concluded that this decline cannot be fully explained
by changes in fares, service levels, car ownership or unemployment.
Instability and loss of integration were key factors.

23. In London, with its tendering system,
this has produced a system based on exclusive rights with private
ownership. London route tendering is perceived to be a secretive
and discredited system leading to contracts being awarded to companies
of questionable character that had no staff or buses let alone
a garage! Competing companies have undercut each other so severely
that they have introduced multi-tiered pay rates with different
rates for each route according to the value of the contract, with
disastrous effect on staff retention and therefore service reliability.

24. Outside London, competitive tendering
for uneconomic services evening and Sundays has prevented economically
and socially justifiable cross-subsidy. Meanwhile, low cost operators
have won contracts to run the service (different to the day time
operator) leading to lower standards, weekly tickets and return
tickets not valid on daytime operator's buses etc.

25. The ownership pattern in the UK is different
from continental Europe, where in a number of cases the companies
providing the services are still publicly owned and operate in
closed markets. This type of ownership and market typewhich
we agree withhas contributed to more through ticketing
in continental Europe than the UK, where mainly private ownership
can hinder the establishment of through ticketing. Unless there
was a monopoly supplier of public transport in that area. If there
is to be a monopoly supplier then it is better that it is publicly
owned.

26. We believe that society needs a higher
level of service than the free market will provide and this can
only be achieved through public ownership. Comparing the service
provision of the UK publicly owned local bus companies with the
big four national UK private companies, we believe it shows that
the "public service" ethos matches more precisely the
needs of the consumer, rather than the "financial market"
driven provision of the private companies. The municipal companies
seek an average rate of return on capital employed of 6 per cent
while the privately owned groups require a 16 per cent return.

The contribution of bus services to reducing social
exclusion

27. It could be argued that the current
Government's policy has been more about "modal shift"getting
people out of cars and on to busesthan about providing
better bus services to people without cars, and generally promoting
social inclusion.

28. Also, according to research by the Joseph
Rowntree Foundation, transport is not a primary preoccupation
of many low-income groups and the role of transport in enhancing
or eroding their quality of life is often unrecognised by them.

29. The availability of bus services is
patchy, most larger urban areas have a reasonable service level
on many main routes during normal work and shopping hoursMonday
to Saturday 6am-7pm. But outside the core hours, service levels
in most towns and cities do not generally match the services available
in comparable areas and hours in London. Bus services in rural
areas are considered to be virtually non-existent. As a result
of this, in many areas, people don't choose to use buses, resulting
in a spiral of decline and of sheer unfamiliarity with buses.
Buses have become a product used only by those without choice
and measures to give their priority meet resistance from people
who can never imaging themselves using them.

30. But at the same time access to reliable
and affordable transport has become more important for those seeking
work. The growing tendency of jobs to be located on the edge of
towns in large retail units, industrial estates or business parks
has exacerbated transport problems.

31. Also employers in rural areas are increasingly
wary about recruiting people without reliable independent transport.
They believe that those dependent on public transport are less
reliable employees and they are often unwilling to be flexible
around starting and finishing times in order to accommodate bus
timetables.

32. In reality public transport is unlikely
to be a viable option for some people, no matter how low their
income is. In these instances they will forego other basic amenities
in order to maintain their car ownership and use. According to
the National Travel Survey: 1998-2000 Update page 8, only 16 per
cent of all rural area households have no car, compared with 36
per cent for Greater London and the Metropolitan built up areas.

33. Improving safety on buses for both passengers
and staff will help with social inclusion. It is the fear of crime
that excludes many of our citizens from using all forms of public
transport. Even if only one part of the journey is perceived as
being dangerous, either the whole journey will be abandoned, or
it will be made by car.

34. We agree with the Joseph Rowntree Foundation
that until social equity evaluation becomes a feature of central
and local government planning, policy and provision, it is unlikely
that the problems of disadvantaged individuals, groups and communities
will be understood or addressed.

35. In the short-term to improve social
inclusion there needs to be a high quality bus service that can
provide access to people, goods and services for those without
access to a car who would be economically better off without a
car. To meet these objectives, buses have to be accessible, and
this means that bus stops have to be within easy reach of the
communities they serve, and that the fares are affordable by those
on low incomes.

36. SUMMARY

We believe that there is positive future for
the bus within our society and that it has an important role in
the Government's 10 Year Transport Plan. It also has an import
role to play an increasing social inclusion. The main points of
our submission are:

 The support given to increase patronage
of buses through subsidies should be increased.

 We would prefer to see quality contracts
introduced, rather than quality partnerships.

 The current regulator regimesespecially
tenderingand structure of the industry should be replaced
with publicly owned and accountable companies. In this new structure,
quality contracts should be introduced to ensure the quality and
service provision. These contracts should be based on modern minimum
labour practices and family friendly policies.

 Action is needed to improve access
to the bus network; this can come from more reliable services
and introducing services into areas not covered by existing services.